Minneapolis Receives Top Credit Ratings
The City of Minneapolis, amid a struggling economy and diminishing state aid, has been awarded top credit ratings from three rating services.
Standard and Poor's rating service awarded the city a AAA rating-the highest possible. Both Fitch Ratings and Moody's also assigned the city top ratings, demonstrating Minneapolis' strong creditworthiness relative to other cities and a low expectation of default risk.
“Declining state aid and increased spending pressures will require future budget cuts, but the city has historically demonstrated willingness to align spending with revenue performance when necessary,” Fitch said in a news release.
Fitch also assigned the city an outlook rating of “stable,” denoting that the agency does not expect Minneapolis' rating to significantly change during the next one- to two-year period.
The city said that the high credit ratings allowed it to sell $33.8 million of tax-exempt general obligation (GO) bonds-which will be used to pay back a portion of outstanding bonds that originally financed the Minneapolis Convention Center and its expansion-to Morgan Stanley & Company, Inc., at an interest rate of 1.28 percent.
The city also sold $71.25 million in taxable GO convention center refunding bonds to Wells Fargo Bank, NA, at a 3.6 percent interest rate.
The city's interim chief financial officer, Heather Johnston, said that the city can buy back existing bonds and then reissue them, thus describing them as a “refund” of the earlier securities. She said that the city “received pretty good bids” and was pleased with the transaction.
All three rating agencies cited Minneapolis' strong financial management, including its diverse economic base and its role a regional economic center.
“These ratings reinforce that the City of Minneapolis is making sound financial decisions with the taxpayers' money,” Mayor R.T. Rybak said in a statement. “Despite tough economic times and significant cuts in state aid, our strong financial planning has enabled us to maintain high-quality core services while positioning Minneapolis for economic growth.”
According to the City of St. Paul's Web site, the other twin city also has received high marks for its credit-receiving an AAA rating from Standard & Poor's and an Aa2 rating from Moody's. The Aa2 rating is slightly below the highest-possible AAA rating, but it still indicates “high quality by all standards.”